Proper Investment Committee Governance
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In This Issue
Fiduciary and Plan Governance Material Proper Investment Committee Governance Summary: An investment committee must focus on fiduciary considerations at all times. Care, diligence, prudence and paying reasonable expenses should constantly be invoked by its members. Source: Planadviser.com Internal Controls for Retirement Plans Summary: Good fundamental internal controls in the operation of retirement plans are the bedrock of fiduciary and compliance requirements. Retirement plan operations and internal controls are complicated, frequently ignored, and a potential source of significant compliance breaches. The fundamental tenants of good internal controls are segregation of duties, reporting & reconciliation, and oversight of outsourced administration functions. This paper will broadly discuss these fundamental tenants. Source: Multnomahgroup.com Fiduciary Committee Best Practices -- Part 2: Preparing Meeting Minutes Summary: In this second part of the series focuses on the preparation of meeting minutes. The goal is make sure your fiduciary committee gets the most mileage out of meeting minutes from a compliance standpoint and avoids stubbing its toe in the event that the minutes find their way into the hands of someone seeking to hang the committee by its own documentation. Source: Employeebenefitsupdate.com How to Effectively Manage Total Plan Costs Summary: To help workers secure a more healthy financial future, Aon Hewitt urges employers to take a closer look at their defined contribution plan costs and make sure they are distributed consistently among all employees, no matter their investment selection. Offers some tips. Source: 401khelpcenter.com Buyer Beware: Sponsors Should Read Details in Fiduciary Warranties Summary: Employer-sponsored retirement plan fiduciaries should be cautious about signing fiduciary warranties, because some provide far less value than fiduciary insurance and can potentially be a "marketing gimmick." Source: Bna.com
Insight: Studies, Research and White Papers How the Millennial Generation Is Transforming Employee Benefits Summary: According to a number of recent studies, the millennial generation, today's incoming young adult employees, shows far more interest than older generations in a broad spectrum of employee benefits to protect them from various life risks. They are more cautious than boomers or Gen Xers in choosing their financial portfolios and more focused on planning for their long-term future. Source: Iscebs.org Americans Flying Solo When Investing for Retirement Summary: New analysis of 13 million 401k investors reveals that across the country, 63% are taking a "Do It Yourself" approach by assuming responsibility for their own investment decisions. Source: Fidelity.com The Real Measure of 401k Plan Success Summary: In recent years, plan sponsors have been encouraged to measure their plan by tracking participation and deferral rates, monitoring investment performance, and benchmarking fees all of which are important, but none of which independently provide a complete guide as to whether or not participants are succeeding -- being able to replace their paycheck when they retire. Source: Unifiedtrust.com
Items of Special Interest to Service Providers New Demands Require New Approaches for Recordkeepers Summary: Retirement administrators today face challenges from both their front-office and back-office operations. They must respond to new demands of servicing their participants, resulting from emerging market and demographic trends as well as regulatory changes. Success depends on their ability to maintain a laser focus on improving their core business operations while reducing costs. Source: 401khelpcenter.com Analysis Reveals Opportunity for Advisors Seeking 401k Rollovers Summary: Judy Diamond Associates released an analysis of the retirement industry that revealed that approximately one-fifth of the assets held in large 401k plans are held by retirees or pre-retirees who have not yet rolled out of their plans. The research indicates that there is an enormous opportunity for financial advisors to assist works transitioning into new retirement plans. Source: 401khelpcenter.com The SEC's New Focus on Cybersecurity for Broker-Dealers and RIAs Summary: The Target department store data breach. The Heartbleed vulnerability. The Internet Explorer exploit. These and other events in the news over the past several months continue to elevate the importance of information security to corporations and the public. And, sure enough, to regulators: Cybersecurity has caught the attention of the SEC's Office of Compliance Inspections and Examinations (OCIE). Source: Mossadams.com Top 10 Attributes of Effective Plan Professionals Summary: Recently, the Leadership Center for Investment Stewards, led by Don Trone, completed research into the 10 attributes that are shared by highly effective leaders and decision makers with an eye out for attributes that are common to both groups. Source: Napa-net.org Provider Trends and the Future of ETF-only 401k Plans Summary: Given that there are more than 600,000 small 401k plans that present plan advisors with many bite-sized opportunities to gather assets, along with an opportunity to rub elbows with well-heeled professionals, it should not come as a surprise if the 401k ETF-only market takes off over the next few years in the small to mid-markets. Source: Napa-net.org
Court, Legal, Legislative and Washington DC MassMutual Is Functional Fiduciary; But Ability to Remove Funds Doesn't Confer Status Summary: Mass Mutual Life Insurance Co. is a functional fiduciary of two Section 401k plans because of its ability to set its own compensation as a service provider, but not because of its authority to substitute funds from the plans' investment lineups, a federal court concluded (Golden Star, Inc. v. Mass Mut. Life Ins. Co. Source: Bna.com Second Circuit Tosses Stock Drop Claim Because Funding a Plan Is Not a Fiduciary Act Summary: Participants in the Morgan Stanley 401k and Employee Stock Ownership Plans sued after the great recession caused the value of 2007 and 2008 contributions to the Plans in Morgan Stanley stock to crater. The first question to ask in any ERISA breach of fiduciary duty case is whether the acts in question are even fiduciary acts. On appeal in this ERISA "stock drop" case, the Second Circuit focused on that basic question, resulting in a clean win for the defendants. Source: Erisa-employeebenefitslitigationblog.com
Compliance and Regulatory Related Compliance Refresher: Fee Disclosures and Comparative Charts Summary: Since June 2012, service providers to retirement plans have been required to disclose to plan sponsors the compensation they receive for their services. This article reviews these required disclosures, changes that have been made, and deadlines. Source: Wagnerlawgroup.com New Wrinkle for the DFVC Program -- Trap for the Unwary Summary: A new DOL filing requirement applies to all DFVC Program filings submitted under EFAST2 (i.e., generally all such filings on or after January 1, 2010). The fact that this new rule thus has retroactive application will make plan administrators even less happy. In the category of "you can't make this up," a problem created because of a shift to electronic filing obligations can only be resolved by filing a paper copy of the Form 8955-SSA with the IRS. Source: Employeebenefitslawreport.com Ready or Not, Here It Comes...the PPA Plan Restatement Summary: It's time again to participate in that never ending ritual of qualified retirement plan restatements. As legislation affecting retirement plans is enacted, the IRS requires all plan sponsors to restate or "rewrite" their plans to conform to current law. For preapproved plans, these required restatements take place on a regular six year cycle. The current cycle of defined contribution plan restatements is being referred to as the "PPA restatement" after the Pension Protection Act. Source: Pensysinc.com Summary: When it comes to qualified domestic relations orders, plan sponsors and recordkeepers need to head off potential issues before they become larger problems. Source: Plansponsor.com Fair Value: Why It Matters for Participant-Directed Accounts Summary: Counter-intuitive as it may seem to some plan sponsors, allowing participants to invest in hard-to-value investments through brokerage windows or self-directed accounts does not eliminate their obligation to establish accounting and financial reporting processes for determining their fair value and, for large plans, obtaining enough detail to present the disclosures required by FASB ASC 820. Source: Belfint.com
Marketplace News DOL Solicits Nominations for 2015 ERISA Advisory Council CBIZ Acquires Tegrit's Retirement Planning Services Great-West Expands Commitment to Broker-Dealer Channel Employee Fiduciary Announces Free 401k Fee Comparison Service Social Media Webinars Launch for Financial Advisors Vanguard's 'Enroll Now' Option Shows Strong Outcomes Transamerica Retirement Solutions Posts Strong Q1 2014 Results Veteran Annuity Researcher Joins IRI The SPARK Institute Releases RFP Guide App Offers Expanded Access to EBRI Research Sell401k Launches "Go Mobile!" Program for Retirement Management Firms Sixth Annual PSCA 403(b) Plan Survey Released
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